The “love offering” appears to be a regional one, but it's the same as a donation jar. This is something that’s not uncommon in the metaphysical community, and here’s how it works. It’s designed to encourage those who have some extra money to share it if they like, while not making those who don’t feel bad about it. It’s a donation given out of love, and ability, rather than obligation. So yes, it’s still a free event, and they’re perfectly within their rights to ask for a donation from those who care to make one. No one is required to do so – if they were, it would be called an admission fee.
That having been said, I think it’s very important to recognize that even “free” events usually cost someone money – and it’s usually the folks who took the time to host and organize them. If there’s food, tables, chairs, entertainment, ritual supplies or even a venue rental, those charges have come out of someone’s pocket, and it’s not unreasonable for them to make you aware that a donation is appreciated.
Furthermore, even if there was an entry fee charged, that's generally acceptable too. Again - events don't just magically happen on their own. Even if the organizers are not making any profit (and I can pretty much guarantee that they're usually not), it's still perfectly acceptable for them to charge a fee that helps offset the costs of the event itself. Some of this may include asking vendors for a table fee, or passing the expenses along to the consumer -- in this case, guests like yourself. If it's billed as an entry fee, and it's outside your range of affordability, then you're under no obligation to attend the event.
I know that in some areas, this topic has become a matter of hot debate between groups – one coven will host an event and ask for donations, and then another coven will accuse the first of being greedy and trying to “bilk the newbies.” I can assure you that this is not anyone’s intention when they ask for a love offering or contribution.
Do you have to donate? Certainly not, and if you can’t afford to do it, no one is going to hold that against you. But chipping a few bucks into a pot, if it’s within your means, is a wonderful way to say thanks to the people who made the effort of putting the event together for you to attend. It’s also a good way to assure they’ll be able to put together another event in the future.